World Bank Reconsiders Trade's Benefits to Poor

'They can say even the World Bank doesn't think free trade would do much for reducing poverty.'

by Paul Blustein

In a recently released book, the World Bank says that the potential benefits
for the world's poor of a far-reaching trade deal "are significantly lower"
than it had previously thought.

The bank has long served as a source of authority for claims -- by
commentators, public officials and others -- that the ongoing trade
negotiations, known as the Doha round, could lift multitudes of people out
of poverty. The scaling back of the bank's projections is noteworthy, and
comes at a sensitive time, as the Hong Kong meeting of the World Trade
Organization remains stalled due to fierce disputes among the WTO's 149
member nations.

The bank estimated three years ago that freeing international trade of all
barriers and subsidies would lift 320 million people above the $2 a day
poverty line by 2015. Now, however, bank economists project the figure at
between 66 million and 95 million people. And even that assumes the WTO
negotiators would completely abolish tariffs, quotas and other obstacles to
commerce - a fanciful scenario, calculated only to show what a maximum deal
would produce.

Assuming a more plausible outcome in which the WTO members agree to some
deep cuts in tariffs and subsidies while stopping short of pure free trade,
the reduction in the number of people below the $2-a-day line by 2015 would
be only about 6.2 million to 12.1 million people, the bank now reckons. That
is less than 1 percent of the people living below the line.

"This is a windfall for anti-globalists," said William R. Cline, a scholar
at the Center for Global Development. "They can say even the World Bank
doesn't think free trade would do much for reducing poverty.". . .